Assessing the Economic Sustainability of the Agricultural Supply Chain by Considering Contract Farming, Climatic Diversity, and Price Bidding Mechanism; An Agent-based Modeling

Document Type : Research Paper

Authors

1 PhD student in Industrial Engineering, Department of Industrial Engineering, Faculty of Engineering, Yazd University, Yazd, Iran

2 Associate Professor, Department of Industrial Engineering, Faculty of Engineering, Yazd University, Yazd, Iran

3 Professor, Department of Industrial Engineering, Faculty of Engineering, Yazd University, Yazd, Iran

Abstract

Today, due to the intelligent nature of each agent, agent-based simulation has become an effective tool for predicting many complex systems between independent agents. These complex systems exhibit behaviors that cannot be inferred from the behavior of the components alone, and each experience of the system may lead to different results.In this study, the Agricultural Supply Chain (ASC) is examined as one of these systems in which agents try to make the best decisions to maximize their benefits through learning from the environment. Agents of this study include farmers, wholesalers, and sellers who independently seek to achieve their individual goals in competing with other agents. The price of crops is determined in a competitive bidding price mechanism. Each farmer can allocate his resources to cultivate a particular crop based on his own and other neighboring farmers experience. They can also become a contract farmer with the nearest wholesaler. Wholesalers decide on a similar mechanism for their contract operation. Eventually, sellers try to meet their demand at the lowest cost. The statistical analysis results showed that as the attractiveness of conventional agriculture in the supply chain decreases, they gradually lose their financial resources and go bankrupt in price fluctuations due to the impact of uncertainties in the market and the environment. These results also showed that the creation of supportive prices and the effects of behavioral and social patterns of agents play an important role in price stability and control of fluctuations in ASC.

Keywords

References

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Journal of Industrial Engineering Research in Production Systems
Volume 9, Issue 18
September 2021
Pages 153-177

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